Wednesday, December 3

NBA v GDP

Here’s an unusual question for you – what sort of relationship, if any, exists between NBA attendance and the US economy?

The reflexive answer would be a strong one. Naturally, when the economy struggles, people cut back on entertainment expenses, such as season tickets, luxury suites, Danny Fortson jerseys, you know, big-ticket items.

With that in mind, here are a couple of graphs which chart that relationship. To accommodate two disparate figures, I have listed two items:

1. The yearly percentage change in average attendance at an NBA game2. The yearly percentage change in US GDP

For the Econ majors out there – I hear you. GDP is a crass measurement of economic activity. It fails to account for any number of items in day-to-day life and has been habitually adjusted by the government to hide deficiencies in economic progress. I get it. But, all that being said, it is the common measuring stick for the economy in the US, so let’s use it anyways.

Shown below is the data from 1963-2008.

As you can see, there is more than just a passing relationship between the two sets of numbers but, when viewed from this distance, it’s somewhat tenuous. However, as time has marched on, you can see that : 1) the two numbers have developed a stronger relationship, and, 2) that the NBA is much less prone to year-over-year swings in attendance growth now than in the past.

For example, from 1963 to 1993, there were seven instances of a yearly change in attendance greater than 10%. From 1994 to 2008, there were zero instances of that happening. What caused the decline in wild swings?

I think there are a couple of reasons:

1. The league has grown more popular. Up until the late 1970s, the league was such a marginal entity the NBA Finals were shown on tape delay. Since the days of Magic and Bird (and MJ), that’s no longer the case. The league has reached a somewhat consistent level of popularity, and is unlikely to repeat its huge increases (and decreases) in attendance.

2. Stadiums are much closer to capacity now, limiting the ability of the league to experience large levels of growth. Any increases now would be marginal, short of selling seats on top of the backboards or staging a “Winter Classic” at the Rose Bowl.

But back to the point of this story – what can we learn from previous GDP downturns? Do they have an effect on the NBA’s attendance?

It’s difficult to say, but looking at the numbers for the past two years, there is a very strong relationship between the decrease in GDP and the decrease in NBA attendance. (See enlarged chart below)

More than the relationship between the league and GDP, these charts show us that the league has essentially stagnated since 1997. In the decade since the strike which wiped out the 1999 season, the league has registered either negative or marginally better attendance figures every season.

As an illustration of this, from 1980 until 1999 the NBA posted a yearly attendance increase of more than 2% no fewer than twelve times. Do you know how many times they have matched that number since then?

Zero.

Which goes back to my point that the league is at a standstill. As I see it, there are two possibilities for the current set-up: Continued stagnation or decline. With the recession in full swing, it seems much more likely to me that – at least for the time being – decline is the more likely option. For those who wonder why the NBA is working so hard internationally to “grow the game” (and, yes, I, too, despise that phrase), perhaps this sheds some light. Perhaps the NBA has realized that any future growth for their sport will have to come outside the US borders, and that the American populace just doesn’t have any room in its belly for more sports.

4 comments:

So in the David Stern era, the trend was up during the second half of the Magic -Bird era. Crashed after the Bad Boy Pistons tidal shift even through Bulls' first 3 peat. Modest rebound during Bulls 2.

To be objective looking at capacity of % of capacity would be an appropriate follow-up step. And it should be noted the NBA shifted its focus towards high revenue customers over volume.

Also worth noting- 89-96 was the NBA's modern boomtime for expansion. Maybe more effect than cause of attendance surge but still worth thinking about.